Manx Financial Group PLC Conister Bank Limited: Regulatory Capital (5056M)
July 31 2017 - 2:00AM
UK Regulatory
TIDMMFX
RNS Number : 5056M
Manx Financial Group PLC
31 July 2017
For immediate release 31 July 2017
Manx Financial Group PLC
Maintaining and Increasing Regulatory Capital for Conister Bank
Limited:
Renewal of Unsecured Loan Notes on Improved Terms
Assignment and Limited Extension of Warrants
Continuing the Group's business plan to increase commercial and
retail lending both in the Isle of Man and the United Kingdom
through its subsidiary - Conister Bank Limited (the "Bank"), the
Group is in the process of maintaining and securing additional
Tier-1 Capital to support the expected new business. Whilst the
Group, unlike many of its competitors, has access to ample
liquidity through the Bank's balance sheet, this cash surplus,
representing customers' deposits, cannot be deployed to fund the
Bank's regulatory Internal Capital Adequacy Assessment Process
projections.
Thus, in the context of the existing convertible loans of GBP1.2
million from Burnbrae Limited ("Burnbrae") and GBP0.5 million from
Jim Mellon ("Existing Loans") which expire on 31 July 2017, the
Group's Independent Directors ("INDs") - excluding Jim Mellon and
Denham Eke by reason of their interest in and/or connection with
Burnbrae, have considered the most suitable method of preserving
the regulatory capital required, which included reviewing
third-party funding options and the practicality of a rights issue.
In considering the advantages and disadvantages of all available
options, including the issues of cost and the provision of onerous
security, the INDs have negotiated the renewal of two unsecured
convertible loan notes ("Loans") with the Group's executive
Chairman - Jim Mellon, on terms better for the Group than the terms
of the Existing Loans. Jim Mellon and Denham Eke recused themselves
from the INDs' deliberations and decision. Jim Mellon indirectly
wholly owns and is Chairman of Burnbrae and Denham Eke is Managing
Director.
Following negotiations with the INDs, Jim Mellon and Burnbrae
have agreed to continue to provide loans on similar terms for a
total of GBP1.7 million, of which GBP1.2 million will be from
Burnbrae and the remaining GBP0.5 million from Jim Mellon himself.
These unsecured loans will be for a period of five years and have
interest of 5.0% (previously 7.0% for the Existing Loans) paid
quarterly. The loans will be convertible at the discretion of the
Group at a price of 7.5 pence per share (previously 4.0 pence for
the Existing Loans).
In connection with the warrants granted in conjunction with the
Existing Loans, Burnbrae is in the process of concluding an
assignment of the rights, benefits and obligations pertaining to a
portion of its warrants (issued on 31 July 2012) to third-parties
on the understanding that these will be exercised on or before 31
July 2017, thus providing new funds to the Group which are intended
to be used to further increase the Bank's Tier-1 capital. It has
further been agreed with the INDs that any warrants remaining
belonging to Jim Mellon and/or Burnbrae will have their exercise
period extended to 24 October 2017 on the basis of an exercise
price of 7.5 pence per share (previously 6.0 pence) ("Warrant
Extension") so as to provide the opportunity of further funding for
the Group. A further announcement will be made in due course once
the documentation is formalised and funds received from the other
parties.
The Group also announces that, in accordance with the terms of
the Warrant Deed issued to Southern Rock Insurance Company Limited
("SRICL") on 24th October 2012, the rights, benefits and
obligations pertaining to the 8,333,333 Warrants available under
the Warrant Deed have been assigned to ICS Risk Solutions Limited
("ICS"). SRICL and ICS are related by virtue of a common ultimate
beneficial ownership.
AIM Rules
The entering into of the Loans by the Company and the Warrant
Extension are Related Party Transactions under the AIM Rules due to
the interests of Jim Mellon and Denham Eke in the transaction as
set out above. As a result of the Group's anticipated future
developments, the requirement for maintaining and increasing
regulatory capital has become more immediate. The INDs have
considered the third-party funding alternatives available. However,
they have concluded that none of these are practical in terms of
either cost or the provision of security. Accordingly, the INDs
(being the Directors with the exception of Jim Mellon and Denham
Eke), consider, having consulted the Group's Nominated Adviser,
that the terms of the transaction are fair and reasonable insofar
as the Group's shareholders are concerned.
For further information, please contact:
Manx Financial Group PLC
Denham Eke, Chief Executive
Tel: +44 (0) 1624 694694
Beaumont Cornish Limited
Roland Cornish/James Biddle
Tel: +44 (0) 20 7628 3396
Britton Financial PR
Tim Blackstone
Tel: +44 (0) 7957 140416
This information is provided by RNS
The company news service from the London Stock Exchange
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